It’s hard to believe but August brings us to the one-year anniversary of the watery nightmare that was Hurricane Harvey and the beginning of the remarkable 2017 hurricane season that also featured Hurricane Irma (marking the first ever U.S. landfall of back-to-back Cat 4 hurricanes) and the devastating Hurricane Maria.
The 2018 hurricane season has been relatively benign so far, and the outlook is for less activity for the rest of the year compared with the historic 2017 season. We should be mindful, however, that “it only takes one” — one landfall to cause significant economic damage and fundamentally disrupt people’s lives.
The property/casualty insurance industry often fades into the background after major disasters, avoiding the media spotlight that is focused on relief efforts while doing the heavy lifting of helping individuals and families rebuild after losses such as those seen in 2017.
Thousands of claims adjusters blanketed the impacted areas, working long days to process the numerous claims that were reported and needed to be settled. A competent and caring claims adjuster is priceless to a homeowner who is still reeling emotionally, trying to process how their life has been turned upside down in a matter of minutes after Mother Nature put their property in the path of its wrath. New, innovative technologies such as drones and aerial imagery helped make the recovery process faster and more efficient, allowing more people to receive help quicker, putting people on the path to recovery sooner and a return to normalcy, if not completely back to normal.
The 2017 hurricane season also highlighted some of the additional benefits that a strong and vibrant property/casualty insurance industry can bring. Strong, statewide building codes in Florida adopted following Hurricane Andrew were a big reason Hurricane Irma did not cause a repeat of the widespread devastation of that historic storm, even though Irma itself was a widespread storm. Strong building requirements from the Texas Department of Insurance (TDI) along the Texas coast also helped.
We must continue to work hard as an industry to find innovative ways to close the protection gap.
Improved resilient construction techniques are a result of the scientific research done by the Insurance Institute of Business and Home Safety (IBHS), which is funded by member companies within the industry. Stronger, more resilient construction leads to less damage and lower premiums, making homeowners insurance more affordable than it otherwise would be in hurricane-prone areas. The reinsurance marketplace provided a much-needed backstop, and the insurance-linked securities (ILS) market was severely tested for the first time and passed with flying colors.
The 2017 season also highlighted opportunities for our industry.
Hurricane Harvey showed that far too few people had flood insurance through the National Flood Insurance Program (NFIP). More needs to be done to educate consumers about the need for flood insurance outside of the 1-in-100-year Special Hazard Flood Zones, and the newly emerging private flood insurance market is definitely helping in this regard.
Hurricane Maria showed that there are many underserved populations who do not have adequate insurance coverage — often the most vulnerable people who are most in need of homeowners or renters insurance do not have a product. We must continue to work hard as an industry to find innovative ways to close the protection gap.
Insurance professionals often tell their stories of how they “fell” into a career in insurance, and I am no exception. I once met a man who told me he grew up wanting to work in insurance. I asked him why he was so motivated to join our ranks, and he spoke of the consequences he saw first-hand growing up in India when a natural disaster hit and there was no P/C insurance to help the community recover.
It is the delivery on our promise as an industry to be there for policyholders in their times of need that make me equally proud to be an insurance professional — for life.
Galbraith is a director of underwriting research at USAA where he leads a team of professionals that specialize in underwriting risks in catastrophe-prone areas. He is a recognized thought leader on P/C insurance with more than 20 years of experience in the financial services industry in a variety of positions.
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